Be careful what you wish for Mr. Mackey!

There’s an old saying that goes something like this: Be careful what you wish for, lest it come true. Take heed John Mackey!

Let me explain. In a previous post (read here) I mentioned that the Whole Foods Market founder and CEO was quoted as saying that if he could go back in time “we wouldn’t have done the Wild Oats acquisition.” Now a US appeals court ruling reversing the decision that allowed the $565 million purchase to proceed, has put the deal on hold, at least temporarily. The court has remanded the case for reconsideration to US District Judge Paul Friedman, saying that he erred when he dismissed the Federal Trade Commission’s claim that the deal violated antitrust law. The FTC opposes the combination saying it could stifle competition and lead to higher grocery prices.

From the point of view of WFM, the deal is a fait accompli as the company has already closed some Wild Oats stores, sold others, and is well down the road toward integration of the two chains. However the ruling, which states that “only in a rare case would we agree a transaction is truly irreversible,” leaves the door open for redress if the acquisition of Wild Oats is found to be unlawful. Of course, that has yet to be determined. (Read the appeal court’s opinion here.)

But even the prospect of reversal begs the question: How do you undo a (largely) done deal?

Potential consequences include a freeze on any further integration of the two chains, including ordering WFM not to close or rename any more Wild Oats stores. And if the FTC ultimately prevails it could order WFM to divest the Wild Oats stores it acquired to be run independently.

In a statement, WFM said that it was disappointed with the court’s ruling and was considering its legal options. Until then, the continuing integration of the Wild Oats business is in limbo while Whole Foods awaits the District Court’s response.  

I wonder what Mackey is wishing now?

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